Snapchat Rises to 280 Million Customers, Reviews Robust Take-Up of TikTok-Like ‘Highlight’ Choice
Snapchat released its latest performance update, which has seen solid growth in both the first quarter of 2021 and in terms of usage and revenue.
The numbers are sure to raise some eyebrows and likely get more social media marketers to consider their options on the app.
Usage first – Snapchat is now used by 280 million people every day, a 22% increase in performance over last year and the largest year-over-year increase in usage of the app Growth in more than 3 years
As you can see here, Snapchat usage has increased across all regions, but the app has seen its biggest again Growth in the Rest of World segment mainly driven by the company’s continued investment in more local content and improved language support options.
Snap has seen particularly strong growth lately in India with the Android update back in 2019This plays a key role in increasing the adoption of Indian users (Android is by far the most popular operating system in the Indian market). In fact, Snapchat reports that for for the first time in the first quarter, the majority of the DAUs were in the Android version of the app. This is a big change for a company that has long resisted Android and has focused more on the technical superiority of iOS devices.
Snapchat also launched its first Snap Original for the Indian market in the quarter with a local version of ‘Phone Swap’.
Snapchat now has over 60 million users in the Indian market, approaching its largest sectors of use.
Snap’s original content continues to play a key role in attracting new users and increasing in-app engagement. Over 20 million people watch the new “Ryan Don’t Know” series starring Hollywood star Ryan Reynolds.
Snapchat is also seeing increased engagement with its AR tools, with the number of Snapchatters engaging with its AR lenses on a daily basis increasing more than 40% year over year. This is expected to become an increasingly important focus for the app. Snap is also reportedly working on a new, fully AR-enabled version of its Spectacles device.
Snap has also highlighted the growth of its TikTok clone, Spotlight, which is not just a feed of short video clips but also offers monetary incentives – up to $ 1 million a day – for the best, most appealing Spotlight shorts.
Several developers have made big bucks with the option and this likely helped improve the general adoption of the option.
“In March, over 125 million Snapchatters were using Spotlight, our newest platform to display the most entertaining snaps from our community. We also launched Spotlight in three new countries – India, Mexico and Brazil – making it live in 14 countries.”
This is significant in the context of the overall growth in usage of Snapchat, but the question arises as to how sustainable this process will be. Can Snap just keep paying millions of dollars to keep the good content and get users to return to Spotlight more?
In any case, there are some concerns that are reflected in Snap’s “Cost of Sales” chart.
As you can see, the company’s content and developer partner costs have risen sharply over the past two quarters, more than doubling from Q3 2020. That number includes the Spotlight payouts ($ 90 million) as well as ongoing AR development. This will be a key element to monitor in the future to see how Snap can keep its momentum in line with costs.
At the same time, however, sales also increase. Snapchat posted a 66% year-over-year revenue increase for the quarter, rising to $ 770 million.
So Snap’s cost of sales may have increased $ 158 million year over year, but total revenue increased $ 308 million over the same period. Maybe the math will work, and Snap can pay that spotlight cost, as the usage benefits would help keep advertisers interested.
In the accompanying notes, Snap also highlighted its growing e-commerce opportunities by investing heavily in AR try-on tools, digital apparel for avatars, and expanded capabilities via its advanced full-body scanning AR technology.
According to Snap, over 75 million Snapchatters viewed Discover Beauty-related content each month in the first quarter, which could indicate additional marketing opportunities on the platform that will feed into the advanced AR capabilities. Earlier this week, Snap launched a new AR testing experience with Estee Lauder.
As stated by Snap CEO Evan Spiegel:
“We believe our leadership in both AR capabilities and user engagement will enable us to extend augmented reality to new use cases and behaviors. For example, as the move to online shopping accelerates, we see an enormous untapped opportunity for AR – driven product innovations in e-commerce – and that our young audience will continue to use these new technologies and shopping experiences at an early stage. “
According to Spiegel, Snap is focused on providing more apparel and accessory tools and helping shoppers find the right size and fit to reduce friction when shopping online. Snap last month acquired FitAnalytics, a company that provides tools that brands use to enable more accurate product matches through AR.
Another area that continues to occupy Snap is the impact of Apple’s IDFA update, which we now know will roll out next week. According to reports, both Snapchat and Facebook will be hit hardest by the change. However, Snap’s chief business officer Jeremi Gorman says both Snap and its advertising partners are prepared.
“We support Apple’s approach because we’ve always believed that advertising should respect customer privacy. The fact that these changes are coming later than expected has added time to roll out Apple’s SKAdNetwork and implement and review it.” Our partners represent a large part of our direct response advertising revenue and have successfully implemented SKAdnetwork for their snap campaigns. “
Gorman further notes that Snap is developing a number of privacy-conscious solutions to ensure they can continue to deliver a privacy-focused experience and great deals to its advertising partners.
Overall, it’s a positive report for Snap, which has now established its niche market and presence in the wider social media arena. At one point, it seemed like Facebook was chewing it up or forcing it out, but Snap has held onto its guns and tuned into its user community, which has allowed it to refine its offerings and maximize its potential as a connection tool.
And it’s definitely a worthy consideration for marketers now. For comparison: Snapchat, which now has 280 million users, has more daily activities than Twitter (192 million mDAU) and Reddit (52 million).
It’s worth thinking about Snap’s audience and how they fit into your strategy.